Capital market

CAPITAL MARKET IS A MARKET WHICH DEALS WITH LONG TERM ASSETS CREATION.

CAPITAL MARKET-

A) DEBT-      1) BOND.       2) DEBENTURE

B) SHARE MARKET - 1) EQUITY SHARE.

IPO

FPO

RIGHT ISSUE

                                       2) PREFERENCE SHARE

PRIMARY MARKET- IT IS A MARKET WHERE COMPANY TO CUSTOMER DEALS TAKES PLACE.

SECONDARY MARKET- IT IS A MARKET WHERE CUSTOMER TO CUSTOMER DEALS TAKES PLACE.

IPO - WHEN A / UNLISTED COMPANY FIRST TIME SELLING SHARE TO PUBLIC THROUGH PRIMARY MARKET.

FPO- WHEN A COMPANY SELLING SHARE SECOND TIMES, THIRD TIME AND SO ON AFTER GET LISTED IS KNOWN AS FPO.

RIGHT ISSUE- AFTER IPO OR FPO ISSUE IF CO UNABLE TO SELL SOME SHARE THEN SHARES ISSUED SOME DISCOUNT TO THEIR EXISTING SHAREHOLDER.

BONUS ISSUE- WHEN A COMPANY DISTRIBUTE DIVIDEND FROM THEIR EXCESS RESERVE ACCORDING TO PROPORTION OF SHARES HOLDING IS KNOWN AS BONUS ISSUE.

BOND- IT IS ISSUED BY GOVT TO PUBLIC TO TAKE LOAN FOR LONG PERIOD OF TIME.

DEBENTURE- IT IS ISSUED TO PUBLIC FOR CORPORATE LONG TERM FUND REQUIREMENT. IT IS INSECURE IN NATURE.

PREFERENCE SHARE- IT IS SHARE BUT ACT LIKE AN INSURANCE CONTRACT. PREF SHARE HOLDER GET PREFERENCE WHILE COMPANY DISTRIBUTING PROFIT BY COMPANY.

EQUITY SHARE- THIS TYPE OF SHAREHOLDER HAVING VOTING RIGHT AND CAN ATTAIN AM AND CAN PARTICIPATE COMPANY’S DECISION MAKING PROCESS. EQUITY SHARE HOLDER FACE HIGH RISK WITH HIGH RETURN.

ADR- IT IS A DEPOSITORY SYSTEM WHERE A COMPANY WANT HUGE FUND FOR LONG PERIOD OF TIME ASK PERMISSION FROM ONLY USE STOCK EXCHANGE WITH INDIAN STOCK EXCHANGE. AFTER FULFILLING ALL NECESSARY REQUIREMENTS CORPORATE GET PERMISSION TO COLLECT MONEY FROM USA STOCK EXCHANGE THROUGH GET LISTED AS ADR.

GDR- IF CORPORATE GOT PERMISSION FROM MULTIPLE STOCK EXCHANGES IS KNOWN AS GLOBAL DEPOSITORY RECEIPT.

IDR- IF FOREIGN COMPANY ASKING PERMISSION FROM INDIA IS KNOWN AS IDR.

DERIVATIVE- WHEN THE VALUE OF ANY ASSETS DEPENDS UPON THE VALUE OF UNDERLYING ASSETS IS KNOWN AS DERIVATIVE.

FORWARD CONTRACT- IT IS  INFORMAL OVER THE COUNTER CONTRACT BETWEEN TWO PARTIES TO DELIVER CERTAIN ASSETS AT PRE AGREED PRICE AFTER CERTAIN PERIOD OF TIME. BECAUSE THERE IS NO REGULATORY BODY IF COUNTER PARTY RISK ARISES THEN SETTLEMENT DONE WITH THE HELP OF COURT.

FUTURE CONTRACT - IT IS  STANDARDIZE CONTRACT BETWEEN TWO PARTIES WHERE BUYER/SELLER HAVING BOTH RIGHT AND OBLIGATION TO SETTLE THAT DEAL AT PRE AGREED PRICE AND PERIOD. BECAUSE OF REGULATORY THERE IS NO COUNTER PARTY RISK.

OPTION- IT IS A STANDARDIZED CONTRACT WHERE BUYER/SELLER HAVING RIGHT BUT NO OBLIGATION TO SETTLE THAT DEAL AT PRE AGREED PERIOD BECAUSE HERE LOSS IS LIMITED UP TO THE EXTENT OF INVESTMENT AMOUNT.

SWAP- IT IS A PROCEDURE OF DIVERSIFICATION OF RISK. THERE ARE 2 TYPES OF SWAP- 1) CURRENCY RATE SWAP. 2) INTEREST RATE SWAP.

ASBA- APPLICATION SUPPORTED BY BLOCKED AMOUNT. HERE APPLICATION IS VALID IF AMOUNT IS BLOCKED IN CUSTOMERS OWN ACCOUNT. WHEN COMPANY ALLOT SHARE THAN AMOUNT DIRECTLY GET DEDUCTED FROM CUSTOMERS ACCOUNT AND SHARE GET CREDITED TO CUSTOMERS DEMAT ACCOUNT. IT IS USED UNDER PRIMARY MARKET.

DEMAT ACCOUNT- PREVIOUSLY SHARE SHOULD BE ISSUED IN MATERIAL FORM (LIKE FIXED DEPOSIT) BUT TO PROVIDE MORE LIQUIDITY ITS MATERIALIZED FORM CONVERTED DEMATERIALISED FORM.

MUTUAL FUND- IT IS AN INSTRUMENT TO COLLECT MONEY FROM PUBLIC AND INVEST IN DIFFERENT MARKET (SHARE, DEBT, GOLD, MONEY MARKET) ACCORDING TO THE CHOICE OF PUBLIC.

NAV- NET ASSET VALUE. PER UNIT COST OF INVESTMENT IN MUTUAL FUND IS KNOWN AS NAV. TOTAL ASSETS/ TOTAL OUTSTANDING NUMBER OF SHARE.

AUTHORIZED CAPITAL - IT IS A CAPITAL A COMPANY CAN RECEIVE FROM MARKET IN IT LIFE TIME (MAY INCREASE).

ISSUED CAPITAL- IT IS A PART OF AUTHORIZED CAPITAL ISSUED FOR SUBSCRIPTION FOR PUBLIC.

SUBSCRIBED CAPITAL- IT IS A PART OF CAPITAL PUBLIC OFFERED AGAINST INVITATION OF OFFER BY COMPANY TO PUBLIC.

PAID UP CAPITAL- IT IS AN AMOUNT PUBLIC SUBSCRIBED AND COMPANY RECEIVED AMOUNT FROM SHARE HOLDER.

HEDGING- IT IS A PROCEDURE TO DIVERSIFY RISK BY USING DIFFERENT INVESTMENT TOOLS. LIKE BOND, EQUITY SHARE CURRENCY, GOLD ETC.

ARBITRAGE- IT IS A PROCEDURE TO GENERATE PROFIT BY USING TWO DIFFERENT MARKETS PRICE FLUCTUATION.

BULL MARKET- IF SHARE MARKET MOVING POSITIVELY ON UPWARD DIRECTION IS KNOWN AS BULL MARKET.

BEAR MARKET- IF SHARE ARE MOVING NEGATIVELY DOWNSIDE IS KNOWN AS BEARISH MARKET.

BLUE CHIP COMPANIES- LARGE CAP SHARES   (CAPITAL MORE THAN 10000 CR) IS KNOWN AS BLUE-CHIP SHARE.

SEBI- SECURITY EXCHANGE BOARD OF INDIA. SEBI IS A REGULATOR (LIKE RBI FOR BANK) TO AVOID FRAUD, CHEATING ACTIVITY IN SHARE MARKET AS WELL AS PROMOTE AND EDUCATE PUBLIC.

INDEX- IT IS A SAMPLE OF OVERALL SHARE MARKET LIKE NIFTY, SENSEX ETC.

SENSEX- IT IS AN INDEX OF BOMBAY STOCK EXCHANGE OF BEST SHARES. IT IS MANAGED BY STANDARD AND POOR’S (S&P) AND ALTERS TIME TO TIME ACCORDING TO THEIR PERFORMANCE.

NIFTY- NIFTY IS THE INDEX OF NSE WHERE FEW THOUSAND SHARES ARE LISTED. CRISIL RATING AGENCY MANAGED INDEX WITH BEST 50 SHARES AND ALTER IF REQUIRED.